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Gold Investment Fundamentals
and the Transfer of Capital
Secular Bull Market in Gold Investments corresponds directly to the Secular Bear
Market in Financials. We explain why this trend will continue and why a
short-term buying opportunity in Gold presents itself.
Central Banks are in all
sorts of a pickle.
With overwhelming evidence
that the global economy is slumping badly:
UK Retail Sales see Worst
Slump in 20 Years
Business confidence in
Germany is at lowest level in 2 years
New Zealand's central bank
cutting interest rates saying slowing economic growth will curb inflation.
decreasing YoY, and imports climbing on record Oil prices.
US unemployment at 4-year
The knee jerk reaction by
central banks is to man the printing presses and hit the accelerator. And whilst
this medicine has worked well over the last 25 years, Central Banks are now
hitting a brick wall that they haven’t encountered since pre-Keynesian 1930s.
Freshly minted fiat currency is falling into the hands of a crippled banking
sector with little capital, ability or desire to carry out the multiplier effect
and make loans to real people in the real economy. In a debt laden global
economy with no reverse gear this headwind is possibly the biggest threat the
Federal Reserve and its ilk aka the establishment have ever faced in carrying
out monetary policy
Point #1 – Gold
investors are well aware of the risks inherent in the current financial system.
The beauty of capitalism
and the associated free movement of capital is that smaller more focused
entities aka Hedge & Private Equity funds can and are rapidly moving into long
held banking preserves.
Direct lending to mid and
small cap entities is now a well worn hedge fund territory.
Extracting value through
A much larger pool of
capital available for short selling.
Private Equity funds
increase investment time horizons.
Highly secretive and
operating out of non-transparent domiciles these entities are by and large out
of the reach of the central banking system.
Point #2 – Hedge Funds
and Private Equity Funds do not benefit from Fed handouts and would be better
served by a currency that acts as a stable store of wealth – Gold !
The transfer of the
financial system is akin to the explosion of information on the internet. The
players that used to have a monopoly on information become less effective. There
will be winners and there will be losers. But right now a bet on Gold
Investments like Gold Stocks and Gold ETFs is a bet against the Establishment
and the out-dated mega-banking system.
Slower growth will
continue to cause problems for financials as bad debts soar, and as a result
Gold investments will continue to propel higher in its multi-year Secular trend.
Figure 1 - Gold Bull
Market (GLD) accelerating as Financial Fears grow bottom (Gold ETF - GDX
outperforming Financial etf -XLD)
The above trend stretched
too far technically over the last 3-months and there has had a rapid reversal
over the last 2 weeks. This is a technical pullback only and the above
fundamentals have not changed. There’s more to come in this fundamental story
and Gold investments (we use GLD gold Exchange Traded Fund) and we could be
getting close to another buying point for gold soon
Gold Investment GLD - $85
is strong support as a confluence of lateral support (green) and the 50-week
Moving Average converge. Its just a matter of time before we have another entry
point to add to our positions and or make another profitable gold investment.
Vermeulen is Founder of the popular trading site
There he shares his highly successful, low-risk trading method. For 6 years
Chris has been a leader in teaching others to skillfully trade in gold, oil, and
silver in both bull and bear markets. Subscribers to his service depend on
Chris' uniquely consistent investment opportunities that carry exceptionally low
risk and high return. Reach Chris at: Chris [at] theGoldAndOilGuy [dot] com
This article is
intended solely for information purposes. The opinions are those of the author
only. Please conduct further research and consult your financial advisor before
making any investment/trading decision. No responsibility can be accepted for
losses that may result as a consequence of trading on the basis of this